ReadCloud : Financial Report for the quarter ended 30 September 2021

For personal use only

ReadCloud Limited

ABN 44 136 815 891

Financial Report for the quarter ended 30 September 2021

ReadCloud Limited

Contents

30 September 2021

Corporate directory

onlyDirectors' report

Auditor's independence declaration

Consolidated statement of profit or loss and other comprehensive income Consolidated statement of financial position

Consolidated statement of changes in equity Consolidated statement of cash flows

Notes to the consolidated financial statements Directors' declaration

Independent auditor's report to the members of ReadCloud Limited Shareholder information

For usepersonal

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ReadCloud Limited Corporate directory 30 September 2021

For personal use only

Directors	Mr Cristiano Nicolli (Non-Executive Chairman)
	Mr Paul Collins (Non-Executive Director)
	Mr Guy Mendelson (Non-Executive Director)
	Mr Lars Lindstrom (Managing Director and Chief Executive Officer)
	Mr Darren Hunter (Executive Director and Chief Information Officer)
Company secretary	Ms Melanie Leydin
Registered office	284 Bay Street
	Brighton VIC 3186
	Phone: [phone]
Principal place of business	284 Bay Street
	Brighton VIC 3186
	Phone: [phone]
Share register	Boardroom Limited
	Level 12, 225 George Street
	Sydney NSW 2000
	Phone: [phone]
Auditor	PKF Melbourne Audit & Assurance Pty Ltd
	Level 12, 440 Collins Street
	Melbourne VIC 3000
Stock exchange listing	ReadCloud Limited shares are listed on the Australian Securities
	Exchange (ASX code: RCL)
Website	www.readcloud.com
Corporate Governance Statement	Refer to the Company's Corporate Governance statement at:
	www.readcloud.com/investors#corporate-governance

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ReadCloud Limited Directors report

30 September 2021

The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as 'ReadCloud' or the 'Group') consisting of ReadCloud Limited (referred to hereafter as the 'Company'

onlyor 'parent entity') and the entities it controlled at the end of, or during, the quarter ended 30 September 2021.

Change in financial year-end

In October 2021 the Company announced a change of financial year-end from 30 June to 30 September. Previously, ReadCloud has reported on a 30 June year-end financial year, with half-year reporting as at 31 December annually. The key School purchasing period for ReadCloud software and course content is from October to March . This results in ReadCloud's key revenue period being split over two financial reporting periods, making it more difficult for investors to interpret the Company's reported results.

The Company considers a change in financial year-end to 30 September for full year and 31 March for half year results will improve the clarity of the Company's results. This will also provide timelier disclosure of information

userelating to sales, operational and financial progress and performance.

Management believes it can provide greater transparency to the market by reporting the Company's half-year results to 31 March annually. At this time the majority of Full-Curriculum eBook sales will have been recorded and the student enrolment process for the VET-in-schools programs will have concluded.

The Company has previously released an annual report for the year ended 30 June 2021. This financial report covers the quarter ended 30 September 2021 with comparative financial information for the 12-month period

ended 30 June 2021. Looking forward, the 1H22 period will be the 6 months ending 31 March 2022 (with

personalcomparatives being for the 6 months ended 31 March 2021) and the FY22 period will be the 12 months ending 30 September 2022 (with comparatives being for the 12 months ended 30 September 2021).

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Directors

The following persons were Directors of ReadCloud Limited during the whole of the financial period and up to the date of this report, unless otherwise stated:

Mr Cristiano Nicolli - Non-Executive Chairman

Mr Paul Collins - Non-Executive Director

Mr Guy Mendelson - Non-Executive Director

Mr Lars Lindstrom - Managing Director and Chief Executive Officer

Mr Darren Hunter - Executive Director and Chief Information Officer

Principal activities

ReadCloud is a leading provider of software solutions, including eBooks, to schools within Australia. ReadCloud's proprietary eBook reader delivers digital content to students and teachers with extensive functionality, including the ability to make commentary in, and import third party content into eBooks.

Students and teachers can share notes, questions, videos and weblinks directly inside the eBooks turning the eBook into a place for discussion, collaboration and social learning, substantially improving learning outcomes.

ForReadCloud sources content for its solutions from multiple publishers so that together with its reseller channel partners, ReadCloud is able to deliver the Australian school curriculum in digital form in all States, on one platform.

ReadCloud also provides digital Vocational Education and Training ("VET") course materials and services to schools through its subsidiaries Australian Institute of Education and Training Unit Trust ("AIET"), PKY Media Pty Ltd (trading as College of Sound and Music Production) and Ripponlea Institute Pty Ltd, which collectively offer over 50 VET courses and Auspicing services to schools across Australia.

Dividends

There were no dividends paid, recommended or declared during the current or previous financial period.

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Platform update

ForInvestment in the ReadCloud platform is seen as a core part of our growth strategy in that it delivers increased levels of automation, streamlines the user experience and continues to provide a strong differentiator in the market. Investment in the platform continued in the 2021 September quarter, with:

• various back-endsystems used by the three ReadCloud VET Group RTO's being unified and the ReadCloud eReader integrated for the delivery of VET course materials. This has been a precursor to the November 2021 launch of a newly developed VET-In-Schoolsplatform that comprises a complete end-to-end digital process from school compliance monitoring and student enrolment portal to students accessing their course materials (via the ReadCloud eReader), students completing assessments online in the ReadCloud Hub and teachers being able to mark student assessments online;

• further improvements to the sales quoting, onboarding and invoicing system for the Direct Full-Curriculumbusiness, greatly enhancing the scalability of this business where more schools can be on-boardedwith the same level of customer support; and

• further investment in the Company's proprietary eReader platform to improve user experience and remove pain points for our customers.

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new schools have signed up for the 2022 school year across all three sales channels.

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• the majority of existing schools across the three sales channels have already recommitted for 2022 school year; and

continued investment in the ReadCloud platform; and

cross selling of VET courses across the existing customer base;

new school signings for the 2022 school year across all three sales channels;

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• identification of potential new revenue generating opportunities on the back of increasing interest in the ReadCloud platform.

• strong retention and recommitment of existing schools across the Company's three sales channels (VET in schools, Direct Full-Curriculumand Reseller Full-Curriculum)for the 2022 school year;

onlyKey operational highlights for the 2021 September quarter included:

useA key focus for the Company in the 2021 September and current quarters is the retention and recommitment of existing school customers across the Company's three sales channels and new school signings for the 2022 school year. Management has been pleased with progress to date:

personalThe Company continues to partner with Full-CurriculumResellers that offer a one-stop-shopsolution to schools wanting a combination of eBooks and physical books/stationary. Two new Full-CurriculumResellers were signed

up in the 2021 September quarter and joint marketing of the ReadCloud platform to their existing schools as well as promoting the joint offering more widely has already borne fruit with new school singings.

Following the acquisitions of Registered Training Organisations PKY Media Pty Ltd (trading as College of Sound and Music Production, "COSAMP", acquired in October 2020) and Ripponlea Institute Pty Ltd (acquired in June 2021), the ReadCloud VET Group (comprising Australian Institute of Education and Training, COSAMP and Ripponlea Institute) is now the largest Private operator of VET-in-Schoolsin Australia by scope of courses offered.

Of the three ReadCloud RTO's collective schools, 85% of those school customers used only one of ReadCloud's VET providers in 2021. A substantial cross selling opportunity exists over the coming years to deliver a wider range of courses to existing school customers who, in general, prefer to deal with fewer RTOs to reduce the administrative compliance burden. Cross selling has already been achieved this selling season and management expects the number of school customers using more than one of ReadCloud's RTOs for the 2022 school year will be substantially higher.

ReadCloud Limited Directors' report

30 September 2021 Review of operations